• Quarterly CPI index rose by 0.3% to reach 0.8%.
  • The currency dropped lower to the 0.60 level: lowest since 2009
  • New Zealand dollar dropped after the RBZ started a quantitative easing program

Technical Analysis:

Monthly Time Frame:

The New Zealand dollar pair has been under the control of the bears since 2017. The currency fell dramatically to reach the 0.60 mark in March 2020.

This is a key level for the pair, so it could now move in either direction. If it succeeds to break the 0.60 mark, the price will likely reach the 0.5460 level. However, if the price bounces and rebounds, the level 0.6730 will be waiting for the price.

NZD/USD - If the price bounces and rebounds, the level 0.6730 will be waiting

4-Hr Time Frame:

On the 4 hour chart, a triangle has formed on the monthly level (0.60) where the price is consolidating before making its move, whether its upward or downward. 

In case, the Kiwi closed below the uptrend (white line), the price most probably will continue its direction downward. However, if NZD/USD broke out the downtrend (white line), most likely the pair will move upward in the next few days. 

Another signal that might indicate which direction the Kiwi will take. Looking at the MACD, a clear hook where the blue line crosses the red line from the top. This signals that the bears are taking control, and a downward movement will begin soon.

NZD/USD - 4hr, MACD, a clear hook where the blue line crosses the red line from the top

Fundamentals Analysis:

A lot of factors may have caused the NZD/USD to depreciate over the last few weeks. Like most other countries, New Zealand started a quantitative easing in March to battle the slow economy by buying back bonds from the government instead of from the markets.

“The Governor believes that QE is a far more effective and efficient tool for dealing with the sharper shock from COVID-19, and left open the possibility that the QE program could be extended further. He even said he was open-minded on direct monetization of government debt.” 

Economists at MUFG Bank report.

Another factor we should take into consideration is the appreciation of the US Dollar against the Kiwi, this leads the NZD/USD pair to depreciate.

Since the beginning of the year oil was depreciating which led investors shift their capitals to safe-haven currencies such as the greenback.

Let’s see how the Kiwi reacts over the next few days.